Tata Group Is Frontrunner To Acquire Air India

The new owners of Air India will be decided in the next few days as the financial bids for India’s flag carrier, AIR INDIA are being scrutinized. The Tata Group, which was the original founders of the now largest air carrier in India, is one of the bidders, and is said to be the frontrunner to get hold of the carrier.

Tata Group and SpiceJet chairman Ajay Singh in his private capacity had bid for debt-laden state-run airline Air India earlier this month. Accordingly, sources said that the two bids are being scrutinized against a reserve price set for the airline. The process will not go ahead if the bids come in short of the reserve price. Reports stated, a panel of ministers accepted a proposal from bureaucrats, who recommended the conglomerate’s bid ahead of an offer from Ajay Singh, according to people with knowledge of the matter, who asked not to be identified as the decision isn’t yet public.

On the official front, DIPAM Secretary Tuhin Kanta Pandey on Friday tweeted: “Media reports indicating approval of financial bids by Government of India in the AI disinvestment case are incorrect. Media will be informed of the Government decision as and when it is taken.” The tweet comes after a media report indicated that the Centre has selected a winning bid.

Furthermore, sources said that at present senior government officials are conducting separate meetings with the two bidders regarding other aspects of the sale such as the indemnity clause and carry over debt levels of the airline. More or less, the final decision can be made within the next few days by the AISAM (Air India Specific Alternative Mechanism).

The AISAM headed by Home Minister Amit Shah is an empowered GoM, which has the authority to take the final call on the matter, without the need of a Cabinet approval. The AISAM is scheduled to meet after all its members are back in the country.

After the announcement of the winning bid is made, the process of a complete handover is expected to take place within three-four months time. The Centre on September 15 had received multiple financial bids for divestment of Air India. The government has of late taken several steps to fast-track the much-delayed privatization of the national carrier.

Recently, the Centre decided to waive taxes on the transfer of assets from the national carrier to Air India Assets Holding Ltd, a special purpose vehicle (SPV). During the Budget speech for FY22, Finance Minister Nirmala Sitharaman had said that all the proposed privatization process would be completed by the end of the fiscal, including the much-delayed strategic disinvestment of Air India.

This is the second attempt of the current Central government to divest its stake in the airline. In the pre-pandemic era, the airline, on a standalone basis, operated over 50 domestic and more than 40 international destinations. Besides, it operated over 120 aircraft prior to the Covid pandemic. During that period, the airline had over 9,000 permanent and 4,000 contractual employees.

Headquartered in Bombay (Mumbai), AIR INDIA’s first ever scheduled air service was inaugurated in 1932 by J.R.D. Tata, flying mail and passengers between Karāchi, Ahmadābād, Bombay, Bellary, and Madras. By 1939 routes had been extended to Trivandrum, Delhi, Colombo, Lahore, and intermediate points. After World War II, in 1946, Tata Airlines was converted into a public company and renamed Air-India Limited. Two years later, to inaugurate international services between Bombay (Mumbai) and Cairo, Geneva, and London, Air-India International Limited was formed.

In 1953 India nationalized all Indian airlines, creating two corporations—one for domestic service, called Indian Airlines Corporation (merging Air-India Limited with six lesser lines), and one for international service, Air-India International Corporation. The latter’s name was abbreviated to Air-India in 1962. In the following decades as India’s flag carrier, the airline extended its international routes to all continents except South America and Australia, and it expanded its cargo operations. To gain a competitive advantage in computerized reservation searches, the airline removed the hyphen from its name in 2005 to become Air India.1946 R. D. Tata founded Tata Airlines in 1932 as a division of Tata Sons Ltd. (now Tata Group). After World War II, regular commercial service in India went back to normal, Tata Airlines changing its name to Air India and becoming a public limited company on the 29th of July 1946.

On June 9th, 1948, Air India introduced a regular service from Bombay to London, and two years later, AIR INDIA started regular flights to Nairobi. In 1993, AIR INDIA’s first Boeing 747-400, named Konark, operated the first non-stop flight between New York City and Delhi. In 1996, Air India started using its second US gateway at O’Hare International Airport in Chicago. Services to Air India’s third US gateway at Newark Liberty International Airport in Newark were introduced in the year 2000.

In October 2016, AIR INDIA changed the Delhi – San Francisco route previously operated over the Atlantic Ocean to flying over the Pacific Ocean, in order to take advantage of jet stream winds and use less fuel. With the total flown distance being over 15,200 kilometres (9,400 miles), AIR INDIA operated the world’s longest non-stop regular scheduled commercial flight.

In December 2020, the government had invited expression of interest for the divestment of Air India. Four bidders had entered the race to take over the beleaguered airline, but Tata Group and Spicejet CEO Ajay Singh were the only ones to make it to the final stage. The Centre had made an unsuccessful attempt to sell the ailing airline earlier in March 2018. However, its expression of interest to sell 76 per cent stake in Air India had no takers at that juncture due to concerns regarding the airline’s burgeoning debt. Top sources from the Ministry of Civil Aviation said all formalities for the Air India disinvestment process will be completed by December 2021.

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